December 21, 2012

WHICH IS ONE WAY TO GUARANTEE TAX HIKES AND SPENDING CUTS:

The news releases arrived via email at almost the exact same time Wednesday. The liberal Campaign for America's Future was screaming for "No Deal" and warning of a "Grand Swindle" of cuts to Social Security and Medicare should President Obama go wobbly in his fiscal cliff negotiations.

At the other end of the spectrum, the plea by the conservative Americans for Prosperity -- an organization backed by the Koch Brothers -- warned of House Speaker John Boehner's position offering a "trillion dollar plus tax increase" in order to get some nebulous spending cuts down the road.

THEY CAN'T STAND WINNING:

In ways inconceivable to Republicans of the 1970s, 1980s, and 1990s, Democrats have embraced almost all of their economic arguments about tax cuts. Back then, sizable swaths of the Democratic Party sought to protect higher tax rates for all. Many opposed President Reagan's 1981 across-the-board tax cuts and the indexing of tax brackets for inflation. Many were skeptical of Reagan's 1986 tax reform that consolidated 15 tax brackets into three and lowered the top marginal rate from 50 percent to 28 percent (with a "bubble rate" of 33 percent for some taxpayers). They despised the expanded child tax credit and marriage-penalty relief called for under the GOP's Contract With America.

Now all of that is embedded in Democratic economic theory and political strategy. The only taxes that the most progressive Democratic president since Lyndon Johnson wants to raise are those affecting couples earning more than $267,600 and individuals earning more than $213,600 (these are the 2013 indexed amounts from President Obama's 2009 proposal of $250,000 for couples and $200,000 for individuals). Yes, some of this increase would hit some small businesses. But that can be finessed.

The larger point is that Republicans are pushing on an open door on taxes. The GOP has won nine-tenths of the tax argument. It just hasn't figured out what do with victory.

This is especially true if, as Democrats suggest, there would be a trade of some structural reforms to Medicare and Medicaid in exchange for raising marginal tax rates on top earners.

AND PUSHING HIM OVER THE CLIFF...:

Many on the left are puzzled by Barack Obama's apparent willingness to support dramatic reductions in federal social spending. It is only because Republicans demand even more radical cuts in spending that Obama's fiscal conservatism is invisible to the general public. But those on the political left know it and are scared.

Yesterday, left-leaning law professor Neil Buchanan penned a scathing attack on Obama for abandoning the Democratic Party's long-held policies toward the poor, and for astonishing naiveté in negotiating with Republicans. Said Buchanan:

"The bottom line is that President Obama has already revealed himself to be unchanged by the election and by the last two years of stonewalling by the Republicans. He still appears to believe, at best, in a milder version of orthodox Republican fiscal conservatism - an approach that would be a fitting starting position for a right-wing politician in negotiations with an actual Democrat. Moreover, he still seems to believe that the Republicans are willing to negotiate in good faith."

Others on the left, such as New York Times columnist Paul Krugman, former Secretary of Labor Robert Reich and others raise similar concerns. They cannot understand why Obama, having won two elections in a row with better than 50 percent of the vote - something accomplished only by presidents Dwight Eisenhower and Ronald Reagan in the postwar era - and holding a powerful advantage due to the fiscal cliff, would seemingly appear willing to gut social spending while asking for only a very modest contribution in terms of taxes from the wealthy.

The dirty secret is that Obama simply isn't very liberal, nor is the Democratic Party any more.

...would just make his presidency even more like that of Reagan and GHWB.